To maintain leading practice regulation of South Australia's petroleum, gas storage, pipeline transmission and geothermal energy industries, in February 2021 the Department for Energy and Mining (DEM) began a review of the current Petroleum and Geothermal Energy Act 2000 (PGE Act) and associated Regulations.
The review focussed primarily on enhancing existing provisions in the PGE Act to more effectively and efficiently deliver the objectives and intent.
South Australia's Climate Change Action Plan commitment to embrace future fuels requires appropriate regulatory frameworks to ensure safe operation of the essential infrastructure for such fuels. Accordingly, the proposed amendments will expand the scope of the PGE Act to cover production and pipeline transmission of hydrogen.
In keeping with this extended scope, and to better reflect the PGE Act's existing scope for petroleum, gas storage and geothermal resources, the review proposes that the PGE Act's title be changed to the Energy Resources Act.
The process was launched with the release of an Issues Paper, detailing the proposed amendments and inviting public comment.
A Bill to amend the PGE Act has been prepared and is informed by comments received during public consultation on the Issues Paper and subsequent draft Bill. Given the predominately administrative nature of the proposed amendments, no major concerns were received. However, the submissions indicated strong support for extending the scope of the current provisions under the PGE Act to also licence and regulate the generation of renewable hydrogen.
The interest shown in renewable hydrogen projects in South Australia calls for these amendments to be implemented as a matter of pressing urgency to give regulatory certainty to underpin investment in this evolving industry.
The Department for Energy and Mining have published an Explanation paper on proposed licensing of Hydrogen activities. This should be read in conjunction with the Bill.
The Minister for Energy and Mining introduced the Petroleum and Geothermal Energy (Energy Resources) Amendment Bill in the House of Assembly on 25 August 2021.
Some of the key amendments proposed in the Bill include:
|1||Revise the title of the PGE Act to the "Energy Resources Act" to reflect the broader scope of the Act to include future fuels (e.g. hydrogen) (Clause 5).|
|2||In response to submissions from the hydrogen industry, the current scope of the provisions under the PGE Act will be expanded to also include generation of any hydrogen from means not already permissible under the existing Act, such as electrolysis of water using electricity. This amendment will afford all hydrogen generation sectors the same best practice regulatory and one-window to government regime as is currently afforded to the oil and gas industries under the existing PGE Act. This will be achieved through introducing a specific Hydrogen Generation Licence (Clause 31).|
|3||Improved stakeholder participation requirements by:|
a) more explicitly requiring stakeholder engagement by the licensee when preparing Statements of Environmental Objectives (SEOs) (Clauses 50 and 52); and
b) introducing a mandatory 30-day public consultation period for all Environmental Impact Reports (EIR) and SEOs as part of DEM's assessment and approval process (Clause 56).
|4||Introduce a Statutory Security so that the Crown has first priority over a Licensee's property in the event of bankruptcy (Clause 65).|
|5||Benchmarking penalties under the PGE Act to be consistent with the Mining Act 1971.|
|6||Introducing the concept of Ministerial determinations, as provided for under the Mining Act 1971, to allow for greater flexibility and effectiveness in clarifying and guiding regulatory requirements, particularly for reporting.|
|7||To achieve greater clarity and consistency of the Act's purpose and key intentions, the objects of the PGE Act will be modified to incorporate sustainable ecological development, public benefit and compensation (Clause 6).|
|8||A number of definitions will be revised and introduced in the Act (Clause 7), these include:|
a) revising the definition for "environment" to better capture social and economic aspects and to ensure that the definition includes the public who may be affected by regulated activities.
b) consolidating all definitions that concern "regulated activities" into the Act, in particular modifying the definition of facility so that it covers all drilling and well intervention equipment.
c) revising the definition of "geothermal energy" to prevent restricting the means of extraction of geothermal energy.
d) amending the definition of "regulated substance" in light of the recent amendment to Regulation 3, namely the addition of "hydrogen and a hydrogen compound or other substance that is a by-product of the production of hydrogen".
e) modify the definition of transmission pipeline to allow for imported substances (e.g. liquefied natural gas (LNG) and manufactured hydrogen).
f) modify the definition of "Serious Incident" to "Immediately Reportable Incident" (Clause 38).
|9||Various improvements relating to greater flexibility in relation to licence terms, maximum licence areas and tendering processes.|
|10||Introducing the concept of "leading performance indicators" into the reporting requirements under the Act (Clauses 7 and 53).|
Should the Bill pass both Houses of Parliament, the Department for Energy and Mining will begin the development of draft regulations for public consultation.